Hobby costs are miscellaneous expenses on 1040
I design and create porcelain dolls. I make the dolls from scratch, pouring the porcelain into molds I have made, I sew their clothes and make their shoes from little pieces of leather. Everything is first quality. My dolls have won awards, and I have displayed them at shows across the country. Because I'm actively engaged in the business of making dolls and am established, I assume my costs are tax-deductible. Does the information about my doll business go on a Schedule C or is it considered miscellaneous itemized deductions?
I like to water ski and I'm really good at it and I win contests and have been doing this for a long time, so shouldn't my friends and neighbors and people I don't even know help me pay for my skis and boat rentals?
Essentially, that is what you are asking when you ask if your doll expenses are tax deductible. Unless I've missed something, it appears that there is no attempt at money-making in your doll business. If that is the case, your business, as it were, is merely a hobby, like water skiing or crocheting, and hobbies don't count as businesses in the eyes of the IRS.
If yours is a business that generates income (for example, if you sell your dolls), and it costs you money to produce that income (for example, the costs of materials to make your dolls), the tax laws are kinder.
The IRS taxes the profit of a business, which means the tax is applied to the business income less the costs of generating that income. When a business that is trying to make money has expenses that exceed the income of the business for three of five consecutive years, the IRS deems the business to be a hobby and disallows deductions for the losses generated by the business.
If you try to make money at your business, the income and related expenses should appear on Schedule C of your tax return. If your business is indeed only a hobby and your income will never overcome your expenses, the income should be included with Other Income on page one of your 1040, and your expenses, only to the extent that they don't exceed the income, are treated as miscellaneous deductions on Schedule A.
Obviously you will have to itemize your deductions to get a benefit for the hobby expenses. Furthermore, the expenses are not only limited to those expenses that don't exceed your hobby income, but the hobby expenses and your other miscellaneous deductions are then reduced by 2% of your adjusted gross income.
As for my comment about asking your friends and neighbors to help pay for your dolls, that is what each of us does when we take a deduction on our tax return. If we don't pay "enough" taxes due to our ability to claim deductions, other people make up the deficit by paying more taxes. If none of us pays enough taxes, according to criteria developed by our friends in Washington, the tax rates are raised so we all pay more taxes. Someone is going to pay the taxes. If not you, then the next guy.
Anyway, enough ranting. Enjoy your dolls and don' t worry about how you're not getting a tax benefit for the related costs. If you sell a doll, report the income and you can take a deduction for related costs, to the extent those costs don't exceed the income from the doll.
I borrowed money from my IRA and was told I have 60 days to pay it back and avoid being penalized on the withdrawal. Sixty days falls on a Sunday, so do I have until Monday to return the money?
Sixty days is sixty days and Monday will make 61 days. If you plan to pay the money back within 60 days, get it there before Monday or your IRA withdrawal will turn into a pumpkin and you'll have to pay a stiff penalty for keeping it one more day. Most banks and financial organizations are closed on the weekend, or at least on Sundays, so you will probably need to return the money by Friday.